The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.
0324 GMT - The latest meeting between President Trump and Chinese leader Xi Jinping is a "stability summit, not a breakthrough" one, according to Charu Chanana, chief investment strategist at Saxo. "The extension [of a trade truce] lowers the risk of an immediate escalation, but it leaves companies facing much the same uncertainty about the rules they will operate under next year," Chanana says in a research note. Investors are looking for "practical" signals, such as published tariff changes, actual rare-earth shipments, agricultural purchases beyond existing soybean commitments, and any change to chip-export licenses, she says. The outcome looks "too thin to drive a sustained rerating of Chinese equities," she adds. (tracy.qu@wsj.com)
0247 GMT - Palm oil falls in Asian trading, tracking declines in soybean oil on the Chicago Board of Trade overnight. Technical analysis also indicates cautious sentiment, AmInvestment Bank says in a note. Still, crude palm oil futures could witness bargain hunting after recent losses. India's lower import duties for edible oils may also support prices, it adds. AmInvestment Bank expects CPO futures to find support at 4,702 ringgit a ton and face resistance at 4,870 ringgit a ton. The Bursa Malaysia Derivatives contract for December delivery is down 52 ringgit at 4,720 ringgit a ton. (yingxian.wong@wsj.com)
0240 GMT - Copper prices strengthen in early Asian trade, as tight physical supply continues to provide support, Baocheng Futures analysts write in a note. Chinese inventories remain at a low level while spot availability continues to be tight, they add. Demand is also showing signs of improvement. Investors are watching for the outcome of the meeting between President Trump and Chinese leader Xi Jinping. The three-month LME copper contract is up 0.1% at $14,631.00 a ton. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
0205 GMT - Delivering new, large-scale copper supply will likely be more costly, slower and riskier than anticipated, says Jefferies. That justifies higher copper prices and reinforces the case for miners to buy copper growth, rather than building new mines, in some instances, it says. In a review of major projects, the bank found many failed to deliver the production volumes expected when a final investment decision was made. A "combination of capex inflation and production underperformance suggests that industry forecasts may systematically overestimate the amount of copper supply likely to be delivered from greenfield projects and underestimate the true incentive price to build new mines," Jefferies says. "The implications for copper supply are significant" and support premiums increasingly being assigned to some operating mines, brownfield expansions and "derisked" development assets, it says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0138 GMT - Potentially higher edible oil demand from India might mitigate concerns over Malaysia's rising palm oil stockpiles, following lower Indian import duties that took effect Thursday, Maybank analyst Ong Chee Ting says in a note. Sunflower oil is expected to be the key beneficiary, as its import duty was reduced by 10 percentage points, compared with 5 percentage points for crude palm oil and soybean oil, he reckons. This could encourage higher sunflower oil imports and support overall edible oils demand ahead of Diwali, he says. The increase in Indian demand may provide some support to Malaysian CPO prices, which are currently around 4,400 ringgit-4,500 ringgit a ton, he adds. Maybank maintains a neutral rating on Southeast Asia's plantation sector, pegging Kuala Lumpur Kepong, Sarawak Oil Palms and Genting Plantations as top buys. (yingxian.wong@wsj.com)
0122 GMT - Malaysia's plantation sector could face greater regulatory uncertainty rather than immediate earnings or land bank risk following Indonesia's passage of an agrarian reform law on Tuesday, CIMB Securities analyst Ivy Ng Lee Fang says in a note. The law introduces limits on land ownership and control by business and affiliated entities, with actual thresholds to be set later. Plantation companies holding cultivation rights might also be required to allocate at least 20% of relevant land for agrarian overhauls or provide equivalent profit sharing, she notes. The impact will depend on how the rules apply to existing landholdings, affiliates and the 20% provision, she says. SD Guthrie, Genting Plantations and Kuala Lumpur Kepong have the largest Indonesian exposure among Malaysian planters, she adds. (yingxian.wong@wsj.com)
0012 GMT - Gold falls in early Asian trade. The precious metal remained under pressure as higher oil prices and resilient U.S. activity data reinforce expectations that the Federal Reserve might need to keep its policy tighter for longer, ANZ Research analysts say in a note. A renewed rally in Treasury yields and a stronger dollar also continue to weigh on market sentiment, they add. Spot gold is 0.3% lower at $4,267.51 an ounce. (amanda.lee@wsj.com)
2034 GMT - U.S. natural gas futures rise sharply as TC Energy declared force majeure on a pipeline in West Virginia after detecting a leak. Nymex natural gas rose 9.1% to $3.297/mmBtu, its biggest single-day gain since January and highest close in three months. The outage affects an estimated 1.8 Bcf/d of natural gas from Appalachia. Prices were also supported by a sixth straight below-average storage build that reduced the inventory surplus over the five-year average to 95 Bcf from 118 Bcf.(anthony.harrup@wsj.com)
2029 GMT - Oil futures rose for a second straight session as a spate of Houthi attacks on Saudi targets raised concerns of escalation in the Middle East while the market remains pessimistic about the U.S. and Iran reaching an agreement anytime soon. "You're seeing a lot of turmoil, a lot of uncertainty in the short term," said Phil Flynn of the Price Futures Group. "Concerns about rates going up, concerns about the dollar, a lot of nervousness." Fears about a possible U.S diesel export ban are adding uncertainty, he says. WTI settles up 2.7% at $94.61 a barrel and Brent gains 3.4% to $106.60. (anthony.harrup@wsj.com)
By Anthony Harrup U.S. natural gas futures posted their biggest-single-day gain since January as a pipeline outage Thursday in West Virginia led to supply disruptions.
TC Energy said it detected a natural gas leak at the Saunders Creek Regulator Station in West Virginia around 8:35 a.m. ET and "immediately activated emergency response procedures."
The company said it reduced the pressure of natural gas to isolate the station, and notified customers of delivery impacts. The situation was confined to the Saunders Creek station, TC Energy added.
The outage sent natural gas futures higher, with the October contract on the New York Mercantile Exchange settling up 9.1% at $3.297 per million British thermal units, a three-month high.
Natural gas futures have been gradually rising as a warmer-than-usual September kept up power-sector demand through the tail end of summer, limiting inventory builds. The U.S. Energy Information Administration reported a 53 billion cubic foot injection into storage for last week, a sixth consecutive below-average build that reduced the surplus over the five-year average to 95 Bcf from 118 Bcf the previous week.
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